2 / Samsung Electronics Sustainability Report 2012 /

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1 2 / Samsung Electronics Sustainability Report 2012 /

2 Green Management Activities and Performance The scope of global data in this section is all operation sites include as well as overseas. 02 Green Management Framework 08 Climate Change Response 16 Eco-Products 24 Green Operation Sites 35 Green Communication / Samsung Electronics Sustainability Report 2012 / 1

3 Green Management Framework Green Management Strategy Establishing a Green Management Strategy Samsung Electronics is implementing green management practices for sustainable development by actively analyzing the impact we make on the environment and assessing management risks associated with those impacts. We considered a wide range of our economic, social and environmental impacts and formulated a systematic green management strategy to adapt to changes in the market environment. We conducted materiality tests to assess key risks identified while developing our green management strategy and prioritized them for more effective management. Details on our green management strategy formulation process and priority risk management activities follow. Strategy Development Process Identification of key environmental issues Risk analysis Internal capacity analysis Strategy development Economy/society/technology Identification of priority on environmental issues Stakeholder consultation Physical risk Regulatory risk Indirect risk Social/cultural risk Internal capacity analysis Identification of external best practices and gap analysis Formulation of short/mid/longterm strategy; Identification of key tasks and key performance indicators Key Risks and Management Activities Type Physical risks Regulatory risks Indirect risks Social/cultural risks Key Issues Rise in price of raw materials and oil Intensified water shortage Implementation of national energy/greenhouse gas reduction policies Strengthened product-related regulations Change in market and industry Increased competition for eco-technologies Changes in consumer preference Increased stakeholder demands Management Activities Installation of high energy efficiency facilities Development of energy use reduction policies Implementation of water resource management strategies and water-related risk management structure Operation site GHG reduction activities Energy efficient product development and sales Regular monitoring and compliance activities of energy/hazardous materials/recyclingrelated regulations Development of Eco-Products and strengthening of green marketing Development and utilization of eco-friendly materials Release of innovative Eco-Products Expansion of consumer green marketing Environmental communication with local community residents Increased stakeholder communication and response to demands Responsive information disclosure 2 / Samsung Electronics Sustainability Report 2012 /

4 Green Management Vision and Mid-term Goals Vision and Slogan Our green management strategy enables us to grow sustainably and invest in the future of both humanity and nature. Samsung Electronics established its green management vision based on our underlying philosophy of helping to build a prosperous society and preserving the environment through business activities that give due respect to people and nature. Our green management activities are reinforced under our slogan of PlanetFirst. Green Management: Basic Philosophy, Vision, Slogan Basic Philosophy Contribute to building a prosperous society and preserving the environment through business activities that give due respect to people and nature based on the concept of reverence for life Vision Creating new value through eco-innovation Slogan PlanetFirst represents Samsung Electronics commitment to sustainable development and social responsibility through eco-driven business and management activities. Green Management Policies Samsung Electronics is committed to leading the realization of a sustainable society. Through our green management activities, we are contributing to the prosperity of humanity and the conservation of the natural environment. Global Green Management System Establish a top-class global green management system, ensure full compliance of all environment safety and health regulations in all our operation sites and enforce strict internal standards. Zero-Accident Green Operation Sites Create recycling-centric production facilities and safe workplaces where wastes are recycled and accident prevention measures are implemented to ensure the health and safety of all employees. Life Cycle Responsibility for Products and Services Take full responsibility for ensuring minimum environmental impact and the highest safety in all stages of the product life cycle including purchasing of parts/raw materials, development, manufacturing, transfer, product use and end-of-life. Preservation of the Global Environment Take actions to tackle climate change and protect local communities as well as the global environment. Disclose green management policies and achievements to both internal and external stakeholders. Green Manufacturing Process Establish manufacturing processes that minimize the release of greenhouse gas emissions and pollutants by employing bestavailable clean manufacturing technologies that enable efficient resource and energy management. / Samsung Electronics Sustainability Report 2012 / 3

5 Mid-term Target: Eco-Management 2013 Eco-Management 2013 outlines our mid-term targets announced in Lowering greenhouse gas emissions relative to sales by 50% from 2008 levels and designing 100% of Samsung Electronics products as Eco-Products are the two core objectives. To reach the stated goals, we have developed 19 specific actions under the three categories of green operations, green products, and green communication. We are taking actions to minimize the negative impact on the environment associated with our business activities and disclosing our environmental achievements against mid-term targets to bolster our commitment to green management. EM2013 Core KPIs and Achievements Area Indicator Target Actual 2012 Target 2013 Target GHG reduction () GHG emissions relative to sales (tons CO 2 /KRW 100 million) Proportion of Good Eco-Products (%) Eco-Product development ratio Proportion of Good Eco-Devices (%) Investment in Green Management Samsung Electronics is making regular investments in green management practicesin two separate categories of investment in green facilities and site operation expenses. In, Samsung Electronics invested KRW 703 billion in green management practices, which is an 86% increase from. Green Management Investment (USD million) Investment in green facilities Site operation expenses Total USD=1, KRW (base year: 31st. Dec. ) Green Investment Detail Indicator Investment in green facilities Site operation expenses Details Investment in air and water quality, waste management and pollution prevention facilities (Extension of air pollution control in semiconductor) Expenses paid to operate pollution prevention and treatment facilities (Power consumption, chemical, labor, accreditation, etc) Environmental Awards and Achievements Samsung Electronics has received international recognition for sustainability performance. For example, Samsung Electronics was selected as a sector leader in environmental performance in the Dow Jones Sustainability Index. It was also selected for the Carbon Disclosure Leadership Index for three consecutive years by the Carbon Disclosure Project. Samsung Electronics won 22 awards including ENERGY STAR Partner of the Year by the EPA. Awards and recognition from external stakeholders indicates the strength of our environmental regulation compliance and stakeholder communication efforts. 4 / Samsung Electronics Sustainability Report 2012 /

6 Recognition for Excellence in Environmental Management Name of Award Given by Date Details Green company assessment International Business School (CEBIS) April Selected as the greenest company among the top 100 foreign companies in Best Global Green Brands Ranking Interbrand July Ranked 25 th in the Global 50 Green Brands rankings Environmental, Social, Governance Assessment Corporate Governance Service August Received A+ grade in environmental management among 800 listed companies Sustainability Index Kyunghyang Daily August Selected as 2 nd best environmental performer among the top 100 companies in Dow Jones Sustainability Index SAM September Named as the most sustainable technology company in the Dow Jones Sustainability Index Named as top environmental performer in the semiconductor sector Carbon Disclosure Project CDP Committee September Included in the Carbon Disclosure Leadership Index for three consecutive years Green Ranking Newsweek October Ranked 22 nd among Global Top 500 companies Ranked 4 th in Tech. Equipment sector Green Ranking Joongang Daily December Ranked 2 nd among top 100 companies, Ranked 1 st in IT sector Environmental Awards Received Region Name of Award Given by Date Details Green Star Certification Award Management Association June Washing machine, refrigerator, Kimchi refrigerator and air conditioner. Green Management Award Ministry of Knowledge Economy/ Ministry of Environment June IT solutions division was awarded with a medal for solar powered note PC. Energy Winner Award Consumers July 10 products were awarded for high energy efficiency including the grand award for smart air conditioner. Consumer Well-being Index certification award Standard Association August Samsung Anycall brand ranked 1 st in mobile phones Green Product of the Year Green Purchasing Network October Solar powered note PC (NT-NC215), low-power monitor (S23A550H) CDP 200 Report Launch & Awards CDP Committee October Included in the Carbon Management Industry Leader National Green Technology Award Ministry of Knowledge Economy November Low-power mobile semiconductor technology CES Eco-Design Award Consumer Electronics Association January Washing machine, electric oven, monitor, memory chip, LCD panel, HDD Energy Star Award Environmental Protection Agency April Selected as Partner of the Year TreeHugger's Best of Green Awards TreeHugger April Restore (SPH-M570) mobile phone Sustainability Leadership Award International Electronics Recycling Conference & Expo May Leadership in Recycling Program Green Millennium Awards Global Green USA s initiatives June SPH-M580 Replenish mobile phone Outstanding Achievement Award Buyers Laboratory Inst. August Eco-Product award for printers with eco-driver technology BGCA Partnership Award Boys & Girls Clubs of America September Recognition for donation of high energy efficiency products Mercury Reduction Award Environmental Protection Agency October Recognition for contribution made in reducing mercury in LED display State Electronics Challenge Award for Sustainability Northeast Recycling Council October Recognition for support made in Recycling Association activities Germany if Material Award International Forum Design Hannover March Eco-friendly materials used in note PC (NT-NC10) UK Which Energy Saver Award Which magazine September Energy Efficient LED TV (55D8000) Green Apple Award Green Organization November Eco-friendly product award for Eco Bubble Washing Machine International Green Award Green Business Enterprises November Eco-friendly innovative product award for Eco Bubble Washing Machine Energy Saving Contribution Award Energy Saving Association May Received awards for two consecutive years Golden Peacock Award WEF, IOD June Eco Innovation award for eco-friendly note PC 900X3A / Samsung Electronics Sustainability Report 2012 / 5

7 Green Management Implementation Structure Organizational Structure Samsung Electronics has a structured organization in place for effective implementation of green management. The CS Environmental Center, which reports directly to the CEO, is in charge of mid-term target setting and monitors green management KPIs. It is also responsible for the development of climate change responses, life cycle GHG emissions management and the provision of supplier support. The CS Environment Center is also responsible for overall green management issues including Eco-Design, eliminating hazardous materials in products, and energy efficiency standards regulations. The Environment, Health and Safety Center is responsible for ensuring the green operations of all production plants through close collaboration with the Environment Health and Safety (EHS) team at each production plant. The center is responsible for analyzing environment and safety risks monitoring changes in global environmental regulations and national policies, and improving Samsung Electronics EHS practices. Each plant also has an environmental affairs manager and a team of experts to ensure compliance with environmental regulations and the implementation of green management improvement measures. Corporate Green Management Committee We are aware of the environmental impact associated with our business activities and the strategic importance of implementing green management practices. This understanding led to the establishment of the Green Management Committee which meets twice a year to confirm green management policies, assess performance and make decisions on the establishment of improvement measures. Samsung Electronics also has a Climate Change Response Committee in charge of supporting GHG emissions and energy management, as well as an Eco Council in charge of supporting Eco-Product development and green operations at facilities. We also hold regular EHS strategy meetings for reviewing changes to EHS regulations and formulating responses. Corporate Green Management Consultation Group Name Green Management Committee Eco-Product Council GHG/Energy Executive Council EHS Strategy Council Frequency Half-yearly Half-yearly Half-yearly Quarterly Details Headed by CEO. Makes decisions on global green management policies and plans Composed of product development team in business divisions. Consults on Eco-Product development strategy Consults on company-wide GHG and energy management strategy Consults on corporate EHS strategy Employee Training Samsung Electronics offers 32 green management training courses in four categories: basic, legal, job function and overseas. The basic course is designed for all employees and provides an introduction to Samsung s green management policies. The legal courses are designed for EHS affairs managers at production plants and are focused on the prevention of accidents and risk management as required in relevant laws and regulations. The courses in the job function category are designed for EHS managers at product and plant management levels to enhance their in-depth understanding of EHS affairs. The overseas classes provide staff at overseas plants with information on EHS requirements that must be observed. 6 / Samsung Electronics Sustainability Report 2012 /

8 Environmental Achievement Management Achievement Management and Rewards Samsung Electronics developed a Global EHS System (G-EHS) for integrated management of EHS data. The system played a pivotal role in boosting our green management capacity into a top-tier program in energy and GHG reduction, product environmental regulation compliance, workplace accident reduction goals and achievement monitoring. We created reward schemes, including the Samsung Green Management Award and the Samsung Electronics Annual Award, to internally promote green management practices. The Samsung Green Management Award is given by the Samsung Corporation to recognize exemplary production plants and suppliers with excellent green management practices. The Samsung Electronics Annual Award is a cash bonus and an extra point in annual reviews given to organizations and employees that made key contributions in green management areas. Environmental Audit Samsung Electronics is participating in environmental audits conducted by internal and external experts in order to identify areas of improvement and take appropriate actions. For example, we have been conducting internal audits on all production plants in regards to hazardous materials and energy management. We have implemented an eco-partner policy which mandates regular assessments on the status of suppliers environmental management and implementation of improvement measures. We also have an internal mandate on the installation and testing of environmental management equipment at facilities, ISO14001 environmental management certification, and an OHSAS18001 safety and health management system for all existing plants and new plants to be constructed. All plants are subjected to regular audits by third party certification agencies. Global-EHS System Environmental Expense Management Samsung Electronics is managing environmental expenses in an integrated and cost effective manner using the G-EHS. The investment in environmental safeguards at facilities and the operation costs of each production plant is managed by environmental managers at each site. The cost data is then collected by the Environmental Strategy team of the CS center annually for calculation of total expenses spent on environmental management. We are following the Ministry of Environment s guidelines on environmental data collection and report the data to relevant stakeholders, including the Bank of. Environmental costs are budgeted during an annual corporate business planning process and spent accordingly. Information Disclosure Samsung Electronics publishes annual sustainability management reports to share information on our environmental management including targets, strategies, GHG emissions data, Eco-Product information, green production plants, and stakeholder communication programs. The information on our green management practices is disclosed on our global web site for easy access by stakeholders. ( We are actively participating in the Carbon Disclosure Project to share our detailed activities and achievement in our carbon management practices. / Samsung Electronics Sustainability Report 2012 / 7

9 Climate Change Response Climate Change Response Strategy Risks and Opportunities Risks and Opportunities Analysis Process Samsung Electronics determines materiality and priority of issues by using five criteria, as listed below, when determining climate change related risks and opportunities. Criteria of Risk and Opportunity Analysis Criteria Significance to stakeholders Industry (competitor) benchmarking Significance to the company Readiness Likelihood Details Concerns of stakeholders such as customers, evaluators and NGOs. Peers and competitors reaction to the issue Impacts to the company wide policy, strategy, goal and others, as well as direct financial impacts (short/medium/long-term financial impacts) Having reasonable control over the issue or not, and degree of readiness in capital (HR & asset) to deal with related issues Probability of events and amount of time left (before potential regulation enforcement) Risk Management Samsung Electronics identified the following climate change risks and response activities for their management. Risk Management Activities Category Regulatory risks Physical risks Other risks Type of Risks Emission trading scheme Emission reporting obligations Product efficiency regulations and standards Product labeling regulations and standards Uncertainty on new regulations Change in precipitation and drought Reputation change in consumer behavior Risk Management Activities Developing CDM project within semiconductor manufacturing process Improving transparency on GHG emissions data through third party verification Increasing R&D on energy efficiency improvement on products and receiving energy marks Increasing number of eco-label certified products Monitoring on global environmental regulations Identification of risks and response manuals on site facilities through regular/special review and 3 rd party audit Strategic response to Eco-Product exhibition and evaluations Developing products using insight from consumer research Capitalizing on Opportunities Opportunities associated with climate change and its impacts on Samsung s operation as follows. Opportunity Creation Activities Category Regulatory risks Physical risks Other risks Opportunities GHG Emissions trading scheme Product efficiency regulations and standards Voluntary agreements Extreme weather events Air and water pollution Increased consumer demand on low carbon products Increase of brand value as a low carbon and energy efficient product provider Reduction in operation cost by improving energy efficiency of equipments Opportunity Creation Activities Development of CDM projects using reductions made at semiconductor production plants and products Introduction of energy mark certified products Voluntarily participating in GHG reduction activities Strengthening system air conditioner business Developing/upgrading of indoor air purifiers, development of water purification technologies Increased number of Eco-Products and related R&D Strategic participation in Eco-Product exhibitions and climate change related evaluations Corporate energy cost management 8 / Samsung Electronics Sustainability Report 2012 /

10 Management Targets and Strategies Based on the environmental mid-term strategy Eco-Management (EM) 2013, Samsung Electronics manages its climate change mitigation activities through two management systems. Our Eco-Design System (EDS)evaluates GHG emissions from a product s life cycle (from designing to disposal of a product) and our G-EHS manages corporate GHG reduction activities from all facilities around the world. We also have gathered GHG emissions data, including GHG data from employee business travels, logistics, and suppliers, in order to manage Scope 3 GHG emissions. Climate Change Response Strategy We have created GHG management strategies for all relevant divisions in order to achieve GHG reduction targets in production facilities, product development, and its suppliers. Climate Change Response Strategy Category Incorporation of GHG reduction facilities Product Energy Efficiency Improvement Implementation of Energy Management System Supplier support Details Reduction of F-gas emissions from the semiconductor and LCD manufacturing process Reduction average energy consumption of products by 40% and achieving 0.5W of standby power by 2013, in comparison to 2008 figures. Implementation of energy management system and establishment of internal energy efficiency certification system subjected to all business sites in Support for the establishment of global supplier s GHG inventory system by offering training and expertise sharing to global suppliers International Initiative Membership Status Initiative World Semiconductor Council (WSC) World Business Council for Sustainable Development (WBCSD) Business Council for Sustainable Development (KBCSD) Electronic Industry Citizenship Coalition (EICC) KPI on GHG Emissions Reduction and Achievements Samsung Electronics designated GHG emissions intensity at n plants as its KPI for GHG management, a figure that accounts for 90% of Samsung Electronics global emissions. The mid-term target is a 50% reduction in GHG emissions intensity by 2013 compared to the 2008 baseline. Samsung Electronics has been meeting annual GHG emissions reductions targets since We reduced intensity by 40% in compared to the 2008 baseline and expect to achieve the 2013 target. We have selected GHG reduction during the product use phase as our second KPI to be achieved by manufacturing energy-efficient products. The 2013 mid-term target is to reduce GHG emissions by 85 million tons (accumulated) from 2008 levels. We aim to achieve this through a 40% reduction in average electricity consumption of Samsung Electronics products compared to a 2008 baseline. We are currently on track to achieve this goal, meeting annual targets since GHG KPI and Achievements KPI Indicator GHG emissions intensity (production in, tons CO 2 /KRW 100 million) Target Actual Reduction Ratio (%, 2008 baseline) Cumulative GHG emissions reductions over five years (Global, 10,000 tons) Target Actual ,169 1,529 2,695 3,292 8,468 - GHG emissions intensity: Total CO 2 emissions 1 (Sales[] / price index 2 ) 1 2 Total GHG emissions from production plants in, expressed in CO 2 -equivalent Producer price index in Bank of public notice (Base year 2005: PPI=1) / Samsung Electronics Sustainability Report 2012 / 9

11 Management Structure Samsung Electronics GHG emission management structure is as follows. GHG Management Committee Name Detail Host Frequency Green Management Committee Discuss and make decisions on corporate-level strategic decisions on climate change response CEO Twice a year Eco-Product Council Set development goals and implementation strategies on high energy efficiency and low power-consumption products Head of CS Environmental Center Twice a year GHG/Energy Executive Committee Establishment and implementation of production plant GHG reduction strategy Head of CS Environmental Center Twice a year GHG/Energy Committee Climate change risks analysis and monitoring Head of Environmental Strategy team Five times a year Scope 1, 2 Emissions Management Scope 1, 2 Emissions Management Process Emission Management Structure The operation sites included in the GHG emission management scope are production plants and buildings under direct operational control of Samsung Electronics. Monthly GHG emission data from eight n plants and buildings, 30 overseas production plants, and 76 non-production subsidiaries (sales, logistics, and R&D centers) are collected through the environmental management system, G-EHS. The emission data from each site are checked against targets and improvement measures are formulated. The GHG emissions data and reduction achievements against targets are reported to environmental managers at each site, in addition to the corporate environmental affairs management team and top management. Emission Calculation Method GHG emissions were calculated with management data at each site and the national guidelines of each country as well as international standards including the IPCC Guidelines, ISO were used as reference for matters not specified in the national guidelines. GHG Emissions (Scope 1, 2) Samsung Electronics GHG emissions intensity in was reduced to 4.46 tons/krw 100 million. which was 13% lower than figures. We have taken various measures including the installation of facilities for reducing GHG emissions from indutrial processes, improvement in energy efficiency of production facilities, installation of high efficient facilities and will continue to implement various GHG reduction measures. GHG Emissions Intensity (tons CO 2/KRW 100 million) Category Indicator 2009 Target Actual Global Actual GHG emission intensity: Total CO 2 emissions 1 (Sales[] / price index 2 ) 1 Total GHG emissions from production plants in, expressed in CO 2 -equivalent 2 Producer price index in Bank of public notice (Base year 2005: PPI = 1) Calculation Method (Global): Global total CO 2 emissions / Global Sales 10 / Samsung Electronics Sustainability Report 2012 /

12 GHG Emissions (1,000 tons CO 2) Region Scope 2009 Scope 1 3,564 4,057 3,924 Scope 2 5,008 5,552 6,031 Total 8,572 9,609 9,955 Global Scope 1 3,750 4,155 4,045 Scope 2 5,875 6,500 7,259 Total 9,625 10,655 11,304 Adjustment was made to n GHG emissions data between 2009 and as a result of third party verification in June following guideline in national GHG target management policy. Data scope is 100 percent of both and global emissions by Samsung Electronics GHG Emissions by Type (Global) (1,000 tons CO 2) 2009 CO 2 6,340 7,012 8,378 SF 6 2,037 2,397 1,738 PFC S N 2 O HFC CH Total 9,625 10,655 11,304 Third Party Verification of GHG Data Our GHG reduction has been verified by a third party agency in compliance with relevant n government policy. The n Foundation for Quality has recently completed verification of GHG emissions data between 2007 and of eight operation sites in. We also voluntarily received GHG emission data verification for overseas production plants. GHG Reduction Activities Samsung Electronics succeeded in reducing 1.4 million tons of CO 2 in. The reduction of 1.03 million tons was achieved with the installation of PFC, SF 6 emissions reduction facilities. The introduction of high energy-efficiency facilities and the optimization of utilities contributed to a reduction of 28,000 and 188,000 tons of CO 2 respectively. Implementation of a waste heat recovery system resulted in 24,000 tons of CO 2 emissions reduction. A collection of improvement measures also contributed to a reduction of 130,000 tons of CO 2 emissions. Third Party Verification of GHG Data / Samsung Electronics Sustainability Report 2012 / 11

13 Scope 3 Emissions Management Scope 3 Emissions Management Process Samsung Electronics Scope 3 GHG emissions include GHG emissions associated with suppliers, product use, transport of parts and products and business travel by n employees. Supplier GHG emissions are calculated using the activity data submitted by suppliers. Emissions associated with logistics and business travel are automatically calculated by the G-EHS. GHG emissions associated with product use are estimated using energy consumption information and typical use scenarios for each product. The GHG emissions of product use are correlated to the energy efficiency of products. The GHG emissions data of each scope can be managed by environmental managers in each division, the corporate environmental affairs management team, and top management. Boundary of Scope 3 Management Raw material Parts Manufacturing Logistics Consumer use Disposal/ recycling Employee business travel Scope 3 GHG emissions are calculated as per related international standards including ISO 14064, IPCC guidelines, WBCSD Scope 3 guidelines and carbon footprint labeling standard of. GHG Emissions in Product Use Samsung Electronics defines GHG Emissions associated with product use as the amount of GHG emissions caused by electricity consumption of Samsung Electronics products. The emissions associated with product use have not increased despite an increase in the number of products sold due to the increased energy efficiency of newer products. We achieved 17,630 thousand tons of GHG emission reductions in compared to the 2008 levels. Improvement Rate of Product Energy Efficiency (%) GHG Emissions Reduction in Product Use (1,000 tons CO 2) Target Actual Target Actual Cumulative 32, ,440 8,350 15,290 10,850 15,270 17, ,340 4, Product Energy efficiency improvement rate = (2008 average power consumption average power consumption) / (2008 average power consumption) 100 Target is made by 10% of annual increasing in product sales volume Scope: All consumer products sold globally (excluding parts) 12 / Samsung Electronics Sustainability Report 2012 /

14 GHG Emissions associated with transport of parts and products Samsung Electronics is monitoring CO 2 emissions associated with transport of materials, parts and products. The emissions have been increasing by 15% per year on average due to the establishment of new overseas production facilities and an increase in overseas production volume. Efforts are being made to reduce product weight and optimize transport routes to achieve reductions in emissions related to transport. A modal shift to lower GHG emissions is also employed to achieve further reduction. Modal shift (Change in means of transport): Samsung Electronics is changing air transport to maritime transport and road transport to railroad transport to achieve reductions in GHG emissions. Emissions Associated with Transport of Parts and Products (1,000 tons CO 2) Business Travel Emissions Samsung Electronics is monitoring GHG emissions associated with business travel. The emissions have increased by more than 10% due to the establishment of new overseas operation sites and an increase in the number of employees. We are making an effort to reduce business travel-related emissions through measures including the encouragement of the use of mass transportation and video-conferencing systems. GHG Emissions Associated with Business Travel () (1,000 tons CO 2) ,340 5,690 7,430 8, Calculation formula: Distance (Km) Weight (Kg) GHG emission conversion factor by emission sources Management scope: transport of products, materials and parts (transport service paid by business partners are also included) Management method: Monthly emissions are calculated based on logistic data Data scope is 100 percent of global emissions by Samsung Electronics 2009 Calculation formula - Air travel: [Distance(Km) No. of employees travelled GHG emissions conversion factor by class] - Land transport: [No. of employees travelled cost (KRW) per travel distance conversion factor (km/krw) emissions conversion factor (ton CO 2 /employee km)] Management scope: Based on global business travel data by -based employees Management method: Emission data is automatically calculated using the G-EHS system on a monthly basis and G-ERP Suppliers GHG Emissions Samsung Electronics manages suppliers GHG emissions data associated with Samsung Electronics business; total GHG emissions of a supplier multiplied by the ratio of sales to Samsung Electronics. Samsung Electronics began monitoring and analysis of GHG emissions from its supplier companies since We provided training courses to help the suppliers report their GHG emissions. Supplier GHG Emissions (1,000 tons CO 2) ,502 Compilation of supplier data has not been completed as of May Scope of 2009 and supplier emissions data is accountable for 40% and 63% respectively of total purchases by Samsung Electronics. Only -based suppliers participated in the 2009 data collection. / Samsung Electronics Sustainability Report 2012 / 13

15 Corporate GHG Emissions Break-down GHG Emissions Break-down (1,000 tons CO 2) Employee business travel 113 Manufacturing 11,304 Logistics 8,440 Consumer use 32,412 On-site Energy Management Energy Management Structure in Operation Sites The CS Environmental Center at Samsung Electronics created climate stratrgy part to manage energy use at operation sites by conducting tasks including the collection of monthly data and the analysis of the cause of changes in emissions. Bi-monthly GHG and energy working group meetings are also held to share success stories and news on energy saving activities. Energy KPI and Achievements Samsung Electronics has adopted an energy cost rate (%) to assess the financial benefits of energy consumption reduction. The 2013 target is 0.878% with a goal of achieving a 2.5% reduction per year. We have optimized the operations of manufacturing and utility equipment, introduced energy efficient equipment and waste heat recycling facilities to achieve the target. The energy cost rate increased in compared to, due to an increase in energy consumption and energy price. However, we succeeded in achieving the target set in Energy Cost Rate () (%) Energy Consumption Intensity (tons CO 2/KRW 100 million) Target Actual Global Energy cost rate (%) = energy cost in manufacturing site () / Sales () 100 Data scope is 100 percent of both and global emissions 14 / Samsung Electronics Sustainability Report 2012 /

16 Electricity and LNG Consumption Category Indicator 2009 Electricity (Gwh) 10,729 11,894 12,925 LNG (Mil. Nm 3 ) Global Electricity (Gwh) 12,180 13,435 15,047 LNG (Mil. Nm 3 ) Data scope is 100 percent of both n and global emissions by Samsung Electronics Energy Saving Activities and Ahievements Samsung Electronics achieved energy use reductions by 171,000 TOE through optimization of manufacturing and utility equipment, installation of high energy efficiency equipment, and waste heat recovery. It is equivalent to savings of KRW 70 billion in energy cost and reduction of 370,000 tons CO 2. Need for systematic energy management is increasing with the introduction of new policies such as the GHG/Energy target management system enforced by government in. Responding to the change, we implemented the Energy Management System (EnMS) for analysis of energy use status, management of reduction targets, and promotion of energy saving activities in systematic manner. Implementation of the EnMS and other energy management initiatives enabled five production plants in Gumi, Giheung, Hwasung, Onyang and Tangjung to receive international energy management certification (ISO 50001) in. We also implemented Pre-certification of Energy Efficiency for all energy using devices, equipment, and raw materials to induce energy efficiency improvement by equipments suppliers and to contribute to energy savings at operation sites. Our ultimate goal is to achieve of GHG emissions reduction and cost reduction at the same time. Renewable Energy Renewable Energy Expansion Plan and Activities Samsung Electronics is developing 1MW of hydro power plant and 1.4MW scale of solar power system in. we are also expanding the investment on solar cell, smart grids and geothermal heating system. We are investing in the development of photovoltaic cells, smart grid technology, and geothermal heating/cooling systems as a sustainable growth opportunity. For example, we have been participating in the n-government led smart grid pilot project on Jeju Island as a smart grids ready home appliance developer. Renewable Energy Status Samsung Electronics QA Lab America and the Austin Semiconductor Production plant are participating in the Green Power Partnership program created by the Environmental Protection Agency for promotion of renewable energy industry. For example, QA Labs America has replaced 73.7% of it s total electricity consumption with a roof-top photovoltaic system. The Austin semiconductor plant purchased 25.5 GWh of renewable energy electricity as well. Green Buildings The Samsung Electronics LED business division formed a partnership with the Samsung Construction Company for the development of an Intelligent Green Building Solution. The objective is to create an energy saving solution which can reduce the energy consumption of a building by 30% with minimal investment. Successful development will significantly contribute to greening of buildings. / Samsung Electronics Sustainability Report 2012 / 15

17 Eco-Products Eco-Product Strategy Strategy and Targets Energy efficiency regulations on electronics products are spreading and becoming stricter due to the need to combat climate change. Environmental regulations on electronic products, including chemical and recycling regulations, are spreading from to other regions including Asia as well as America. Market demand for energy efficient Eco-Products is increasing as well. Samsung Electronics is responding to such demands by governments and consumers by developing Eco-Products in accordance with global environmental labeling requirements and improving the energy efficiency of products. More specifically, we developed an environmental assessment system using criteria including the eco-friendliness of products with the restriction of hazardous materials, energy efficiency, the use of environmentally preferable materials and technologies, in addition to setting annual targets for improvement and an overall Eco-Product development ratio. We are also increasing the number of products certified with global environmental labeling in response to the increasing demand for Eco-Products by consumers and public procurement policies. We are making a strong effort to improve the energy efficiency of our products by introducing innovative technology, such as a solar-powered note PC. We are also expanding the number of products with carbon footprint and carbon footprint reduction labels in, and Carbon Trust certification in UK. Eco-Product KPI and Achievements Achieving a 100% Good Eco-Product development and a 40% improvement in energy efficiency are core performance indicators for Samsung Electronics mid-term environmental management goals (EM2013). In, the Good Eco-Product and Good Eco-Device rates increased to 97% and 85% respectively, exceeding the targets. Product energy efficiency was also improved by 25.6% in when compared to the 2008 level, contributing to a reduction in GHG emissions. Eco-Product Development (%) Product Energy Efficiency Improvement (%) Category Actual/Target 2012 Target 2013 Target Actual/Target 2012 Target 2013 Target Good Eco-Product 97/ / Good Eco-Device 85/ Product energy efficiency improvement (%) is the average energy efficiency improvement of eight key products over 2008 baseline. Eco-Design Process Life Cycle Assessment and Eco-Design Process Samsung Electronics first introduced Life Cycle Assessment (LCA) methods in We are now considering life cycle thinking on the products developed to minimize environmental impact. In 2004, we implemented the Eco-Design Assessment Process and made an environmental impact assessment at the product development stage mandatory. In 2008, we created the Eco-Design System (EDS), which enabled the implementation of an Eco- Product Rating Program for assessing the green attributes of each development project. We are also conducting activities to increase the longevity of products to decrease the environmental impact associated with product disposal. For example, the Evolution Kit in our Smart TV enables the installation of new functionalities without changing any hardware. We also made our PCs easily upgradable to lengthen the useful life. We are also increasing the use of recycled materials to improve resource efficiency. 16 / Samsung Electronics Sustainability Report 2012 /

18 Eco-Product Rating Program All of our product development projects are subjected to an eco-friendliness evaluation with three ratings including Premium Eco, Good Eco and Eco defined in the Eco-Product rating. The criteria for the Eco-Design assessment consists of more than 40 detailed criteria which fall into three categories of resource efficiency, energy efficiency and environmental impact. We aim to increase the ratio of Good Eco-Products that meet the strict standards required for global environmental labeling. Product Energy Efficiency Compliance with Energy Regulations Regulations on energy efficiency and standby power consumption are being adopted by an increasing number of governments. New regulations were introduced in South America and Middle East nations while and North America are strengthening existing standards. We are monitoring changes in energy-related regulations in order to devise preemptive responses to cope with the changes. Eco-Design and Eco-Product Rating Process Resource e f fi c i e n c y Feedback to exsting quality assurance activities Product development process Concept Plan Development Environmental hazard Energy e f fi c i e n c y Eco-Design manual Eco-Design activities Targets Assessment and improvement Final verification Product Energy Efficiency Policy and Activities Samsung Electronics is making an effort to develop products with vastly improved energy efficiency and ultra-low standby power consumption in order to go beyond meeting new energy efficiency regulations. Our mid-term goal is to reduce annual energy consumption of our products by 40% and achieve an accumulated reduction of 84 million tons of CO 2 over a five-year period. For example, we achieved further reductions in our flagship Eco- Product, LED TVs, by reducing the number of backlight LED lamps by 38% in the 55-inch model and improving power consumption by 20%. One of our refrigerators also won an A+++ rating, the highest energy efficiency rating given in, by employing vacuumed insulators and high-efficiency compressors. We are also making a sustained effort to reduce standby power consumption. In, we managed to increase the ratio of products with lower than 0.5w standby power consumption to 84% of products. Thanks to the number of improvements made, we were able to reduce annual power consumption associated with product use by 25.6% when compared to the 2008 baseline, which is equivalent to million tons of CO 2. Mass production Premium Eco-Product More than four superior qualities : Innovative Eco-Product Good Eco-Product Two or three superior qualities : Qualifies for environmental marks Eco-Product One or less superior qualities : Compliant with regulation standards / Samsung Electronics Sustainability Report 2012 / 17

19 Eco-Product Development Performance Eco-Product Development and Launch All business divisions have Eco-Product development and release plans in order to launch products with improved energy and resource efficiency, less hazardous materials, and innovative green technologies. The Eco-Products released in are as follows. Eco-Products in Product Product Type/ Model No. Key Environmental Characteristics Product Product Type/ Model No. Key Environmental Characteristics LED TV Power consumption down to 12% Mobile phone Solar charging capability (UN46D7000) Auto off function (Rant3) Rate of recycled resin 70% Mercury-free Edge LED Free of BFR/PVC/beryllium/phthalate Environment certified Monitor Eco-motion sensor (auto off) Washing machine Power consumption down to 26% (S23A550) Mercury-free LED (WR-HH139CQ) Washing time reduced to 50% 32% improved resource efficiency Eco Bubble washing technology Blu-ray player Power consumption down to 16% Refrigerator A+++ energy efficiency rating (1 st in ) (BD-D5500) Resource efficiency up to 8% (RL60GQERS1) Eco refrigerant (R-600a) Mercury-free LED Use of recycled plastic Home theater Power consumption down to 32% Air conditioner Power consumption down to 32% (HT-D5500) Resource efficiency up to 20% (AF-HD202TSA) Size of heat exchanger reduced to 50% Eco refrigerant (R-410A) Resource efficiency up to 33% Printer Power consumption down to 30% Hoover Energy efficiency improved to 4% (ML-5015ND) Resource efficiency up to 15% (VCC88L0H31) Environmental HEPA filter One-touch Eco-button for eco-printing Printer (ML-2950ND) Power consumption down to 28% Low noise (lower than 51dB) Memory (DDR3 4Gb) Power consumption down to 67% (memory product) Resource efficiency up to 25% Power consumption down to 15% (server product) Made without use of Halogen materials Won CES Eco-innovation award CES Eco-Design Innovations Award Samsung Electronics received the CES (Consumer Electronics Show) Eco-Design Innovations Awards in four different product categories in January 2012 which are the most among companies awarded. In CES, the company received for six different product categories and it was the most as well. Awarded Products and Model Solar Note PC NC215 Washing Machine WF457 Microwave SMH2117S Transparent LCD LTI460AP01 18 / Samsung Electronics Sustainability Report 2012 /

20 Chemicals Management in Products Management Policies for Chemicals in Products Samsung Electronics is strictly managing the use of chemicals in its chain in order to ensure compliance with RoHS and REACH regulations and to enforce the voluntary management of potential chemicals with environmental impacts based on precautionary principles. We list and manage the chemicals under legal or voluntary management in Standards for Control of Substances concerning Product Environment (0QA- 2049). Based on this standard, we conduct regular audits and inspections to prevent the use of restricted chemicals in all the parts and final products for absolute compliance. Eco-Partner certified suppliers are eligible to do business with Samsung. We are also providing active support for suppliers including regular training on chemical management and updates on relevant regulations to ensure our suppliers stay in compliance with relevant regulations and voluntary bans. Product Chemical Management in Supply Chain For effective management of chemicals, we operate Eco-Partner Certification program that qualifies suppliers for chemical management practice. To become an Eco-Partner certified company, suppliers must fulfill two main criteria; (i) compliance with the Samsung Electronics Standards for Control of Substances concerning Product Environment; (ii) demonstration of an adequate environmental management system. Eco-Partner can renew certification by site audits or self-assessment based on potential risks of their supplied parts and materials. We are also providing active support for suppliers including regular training on chemical management and updates on relevant regulations to ensure our suppliers stay in compliance with relevant regulations and voluntary restrictions. We established the Environment Chemicals Integrated Management System (e-cims) in 2009 for the effective operation of the Eco-Partner Certification program. We are able to assess material composition and chemical contents of final products using materials data and chemical information submitted by suppliers. Chemical Management Process in Supply Chain Product environmental certification Materials Data (Analysis Data: Materials contents) Materials Data (Analysis Data: Materials contents) Samsung Electronics e-cims Part suppliers Raw materials provider Eco-Partner Certification / Samsung Electronics Sustainability Report 2012 / 19

21 Achievement of Chemical Management in Products Samsung Electronics phased-out six hazardous substances of concern (Hg, Pb, Cd, Cr 6+, PBB, PBDE) in all products to comply with RoHS regulation. We also completed a survey on the use of 73 Substances of Very High Concern (SVHC) by EU REACH, which are list of SVHC announced in December in EU. We are disclosing information on products using SVHC materials of more than 0.1% of the product mass. We phased-out Polyvinyl Chloride (PVC) and brominated flame retardants (BFRs) in all mobile phones and MP3 players sold on the market beginning in April,. For note PC, we launched the first PVC-free and BFRs-free in October, and eliminated PVC and BFRs in all 15 note PC models released in. From we also began to employ PVC-free internal wires in our TVs, monitors and home theater. We have been managing a world-class environmental analysis lab which is capable of analyzing hazardous materials and volatile organic compounds (VOC). The laboratory received international analysis lab certification from, KOLAS, and BAM Germany, while improving credibility of its analysis results. The analysis lab standardized the analysis process for phthalates and 10 types of VOCs. Overall, it has analysis methods for 70 types of chemicals. Take Back and Recycling Policy on Take Back and Recycling Samsung Electronics is committed to reducing electronic waste generated throughout product life cycles and promoting the take back and recycling of electronic products as part of its commitment of product stewardship in accordance with individual producer responsibility (IPR). In 1998, Samsung Electronics began the establishment of s first electronics product recycling structure with the Asan Recycling Center. We now have eight recycling centers in with 1,500 sales centers and 21 regional logistics centers serving as collection agencies to transport end-of-life electronics products to recycling facilities for the reuse of resources. We were the first electronics manufacturers to become an e-stewards Enterprise within the Basel Action Network (BAN). BAN is a -based non-profit organization specializing in environmental preservation and human rights protection that developed a responsible recycling certification program named e-steward. Working with BAN, Samsung is striving to prevent the export and landfill of electronics waste into developing countries. Global Take Back and Recycling Program Samsung Electronics is operating take back and recycling programs in 60 countries including the,,, and.. In North America, we expanded the Samsung Recycling Direct (SRD) drop-off to 1,151 locations in 50 states. We have also set up a voluntary recycling program in with 235 fixed drop-off locations for small mobile devices and 291 locations for larger consumer electronic products as well as offering recycling information to consumers online. We have established 16 drop-off locations in and plan to set up a recycling system in Australia for the collection and recycling of mobile phones, TV, PCs and printers in May / Samsung Electronics Sustainability Report 2012 /

22 / Samsung Electronics Sustainability Report 2012 / 21 Global Take Back and Recycling Performance Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Take part in the nation s joint recycling system Take part in the nation s joint recycling system Take part in the nation s joint recycling system Colombia Colombia Colombia Brazil Brazil Brazil Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Across 50 states Australia Australia Australia Operate, take back, and recycling for TVs, PCs, printers Operate, take back, and recycling for TVs, PCs, printers Operate, take back, and recycling for TVs, PCs, printers Participate in a voluntary mobile phone take back program Participate in a voluntary mobile phone take back program Participate in a voluntary mobile phone take back program Global Take Back and Recycling Performance Samsung Electronics is operating take back and recycling programs globally and the collection amount has steadily increased year on year. Recycling Amount () (tons) Products Packaging 4,223 55,831 4,787 56,736 5, ,940 Recycling Amount (Global) (tons) Category Asia North America Total 59,281 23, , ,517 55,176 35, , , ,414 7, , ,791

23 Recycling Amount by Product Categories () (tons) Refrigerator Washing Machine Display Products Others Total 26,086 9,379 12,105 4,370 51,940 Reutilization of Resources () (tons) Steel Non-ferrous Metal Plastic Glass Others Total 17,557 6,392 11,627 7,371 3,478 46,425 Total amount of reutilization of resources does not include waste scrapped. Recycled Plastics Samsung Electronics has a target to increase the use of recycled plastic by 2.62%. To promote its application in products, we included a criterion of recycled plastic use for Eco-Product rating. In, it was significantly increased to 2.26% by expanding its application into production plants in, Thailand, and Mexico. Amount of Recycled Plastics Recycled plastic used (tons) Ratio of recycled plastics (%) 12,519 1,833 2, Ratio of Recycled Plastics (%): Proportion of recycled plastic use compared to total plastic resin use Eco-Product Labeling and Certification Global Environmental Labeling and Certification In, Samsung Electronics received total of 2,630 product models for global Eco-Product labeling, which is the highest number in the electronics industry. It was granted from 9 certification bodies globally that promote Eco-Product development and green procurement. Global Eco-Labeling (no. of models certified) South EU Germany Sweden Northern Taiwan Total ,630 Baseline: 31 st of Dec. 22 / Samsung Electronics Sustainability Report 2012 /

24 Carbon Footprint Labeling Samsung Electronics has been actively participating in the n carbon footprint labeling scheme which was launched in 2009 to encourage voluntary GHG emission reduction by product manufacturers. We are disclosing information on GHG emissions associated with the lifecycle of our products by participating in a carbon footprint labeling scheme. In 2012, Samsung had 32 models certified with labels, which is was the largest number among electronics manufacturers. In February 2012, we received s first carbon footprint reduction label for an LED TV, a laptop PC and a memory chip product. The carbon footprint reduction label is only given to products that achieved exceptional carbon reductions including meeting a standard set by the Ministry of Environment, or achieving a more than 4.24% reduction against a baseline model. Our smartphones, the Galaxy SII and Galaxy Note, received Carbon Footprint labels from the U.K. Carbon Trust in March 2012, making them the first mobile phones in the world to be carbon footprint labeled. The carbon footprint is calculated through a detailed assessment on GHG emissions associated with the full lifecycle of the product from manufacturing through use and end-of-life. The SPC Certification Eight mobile phones received Platinum ratings for Sustainable Product Certification by the -based and renowned safety testing and certification organization, the Underwriters Laboratories. The SPC certification is only given to products that meet high standards on lifecycle criteria including energy efficiency, convenience of extending useful life of products, corporate environmental achievement and more. The Green Certification () Green Certification was operated and managed by KIAT ( Institute for Advancement of Technology), an organization affiliated with the n Ministry of Knowledge Economy. The certification is given to ecofriendly technologies or projects with energy resource conservation and reductions in GHG emissions. Samsung Electronics received 21 Green Certifications for 20 green technologies and one green project, the highest in the electronics sector. / Samsung Electronics Sustainability Report 2012 / 23

25 Green Operation Sites Operation-Site Environmental Management Structure Policies and Strategies Samsung Electronics is conducting a lifecycle environmental impact assessment on our business activities in order to contribute to global ecosystem protection through measures from reductions in GHG emissions to recycling of waste water. We have implemented various systems including a lifecycle pollution control system, environmental risk elimination, and preventive measures in order to minimize environmental impacts and to prevent environmental accidents. Targets and Assessment of Achievements The EHS Strategy council is held on a regular basis to make policies on prevention of EHS accidents and the environment and safety risk assessment. The council reviews and analyzes global environmental guidelines, national policies, and makes decisions on relevant corporate policies. It reviews achievements on green management of operation sites and shares the best practices to bring sustained improvement in Samsung Electronics EHS standards. Each operation site has an EHS committee which consists of the top executive in charge of operations and EHS experts for the implementation of decisions made by the council and to resolve related issues. All decisions made by the committee are openly disclosed to all employees. Samsung Electronics holds a Global EHS/Utility Conference with EHS and utility management and staffs on a regular basis. The participants share EHS strategies, regulation changes, stakeholder demands, new technologies and best practices to contribute to the overall EHS management at Samsung Electronics. KPI Target and Performances Item Management System Certification Received (%) 1 Waste () Water Resource () ISO OHSAS18001 ISO Re-utilization rate (%) Emissions relative to sales (tons/krw 100 million) Water use relative to sales (tons/krw 100 million) Achievement in targets % reduction over 50 tons/krw 100 million previous year 2 maintain 2009 level 2 Implementation strategies Standardize Management System Acquire ISO certification for new business sites within one year of establishment Establish resource recycling-based system Reduce amount of waste generated Secure stable water supply Increase water recycling 1 Scope: 38 production plants (: 9, Global: 29) 2 Excluding LCD business division which has become a subsidiary company as of April 2012 Environment and Safety Risk Assessment International organizations and NGOs are introducing guidelines on human rights and environmental protection. Countries where Samsung Electronics has production plants are strengthening policies on environmental protection and occupational safety. We are monitoring changes in international policies and regulations to proactively respond. Moreover, we are increasing our efforts to eliminate environmental risks at the source. Risk Analysis and Response Process Information Collection Impact Analysis Response Activities Monitoring Changes in policies & market Changes in internal conditions Analysis of financial and nonfinancial risks and opportunities Establishment/implementation of response plan Performance check and data collection Establishment of rules and processes 24 / Samsung Electronics Sustainability Report 2012 /

26 Environment and Safety Risk Analysis and Response for Plant Expansion Business planning Construction Approval for operation Analysis of regulations on construction and environmental standard Utility supply condition analysis Analysis of utility supply Infrastructure Engineering design and verification Environmental Impact Assessment Internal approval on construction project Construction and environmental permit approval Inspection on environmental safety facilities and utility supply line Environmental Safety Accident Response Structure Samsung Electronics has an emergency response program which consists of emergency response scenarios and regular training to assess the effectiveness of the emergency response scenarios. For different types of production plants, different emergency response scenarios are prepared including accidental release of pollutants and hazardous chemicals, fires and explosions, in addition to natural disasters. We are maintaining high-preparedness to respond to any environmental safety accident with corresponding emergency scenarios. We also have emergency response members in place who are prepared to respond in a timely manner to handle the crisis and to ensure a fast recovery. We also have a crisis review process to analyze the cause of an accident and to conduct prevention exercises to ensure that the accident is never repeated. Meanwhile, we are conducting emergency response training on a regular basis with participation of all departments to check the effectiveness of the crisis management structure and to maintain preparedness. We also conduct monthly fire drills which consist of fire-fighting and rescue exercises as well as an emergency evacuation to ensure the safe evacuation of all employees during emergency situations. Emergency Preparedness Accident event Emergency response Investigation on cause and damage Establishment of response plan Implementation of Improvement measure and prevention activities / Samsung Electronics Sustainability Report 2012 / 25

27 Environmental Safety Management System Certification Samsung Electronics established an EHS management structure in all operation sites and earned certifications including ISO and OHSAS We are maintaining our environmental management structure by receiving continuous assessment or re-assessment. All new production facilities at Samsung Electronics are required to receive ISO and OHSAS18001 certification. In, five production plants in Gumi, Giheung, Hwasung, Onyang and Tangjung received international energy management certification (ISO 50001). We plan to receive ISO certification atall our operation sites by 2015 in order to establish a systematic energy management structure. EHS Management Certification (Global) Type No. of Operation Sites Certified Certification Rate 2015 (Target) ISO % 100% OHSAS % 100% ISO % 100% Type Suwon Gumi Gwangju Giheung Hwasung Onyang Tangjung Cheonan Giheung LCD ISO BV BV BV BV BV BV OHSAS BV BV BV BV BV BV ISO (expected) (expected) Energy Management Corporation 2012 (expected) 2012 (expected) Green company certification Correction on certification approval date Giheung plant received BS 7700 in Nov and ISO in Sep Green Company: A company designated by the Minister of Environment of which has made a great contribution to improving the environment ISO Certification of Samsung Electronics Gumi Plant The Gumi plant received ISO energy management certification in July The Gumi plant implemented a systematized management structure on energy purchasing, supply, use and reduction which resulted in optimal energy and cost management. The energy management system was integrated into overall plant management along with the existing ISO environmental management and OHSAS occupational safety management systems for comprehensive environmental safety management. Energy Management System Certification 26 / Samsung Electronics Sustainability Report 2012 /

28 Global Green Purchasing Name of Subsidiary SAMEX SAS SEM-P SEDA(C) SEDA-P(M) SERK SEH-P SESK SELSK SEPM SEIN-P ISO OHSAS Certification Agency BSI-QA BV BV BV SUCOFINDO Samsung Electronics signed up to the voluntary agreement on green purchasing with the n Ministry of Environment in 2005 in order to promote purchasing of eco-friendly products and for a sustainable consumer culture. In 2007, we implemented internal Eco-Product priority purchasing policies, environmental manuals and green purchasing rules to further promote the purchase of green products. The Eco-Product priority purchasing policies require the purchasing department to choose products that are better for the environment including products that received environmental labels, recycled products and highly energy efficient products when purchasing office supplies and raw materials. SAVINA-P SDMA-P DNV, RvA SEV TSE-P BSI Environment Operation Control SEMA SEPHIL SIEL-P(C) SIEL-P(N) TSEC TSOE SEHZ TSTC SSKMT SSDP SESC SESL SESS SSEC DNV SGS BV AFAQ-EAQA CQC CQC SSCC CQC BV BV CQC Water Resource Management Water resource management has become a prominent global environment issue along with climate change. Today, an increasing number of regions are suffering from permanent water shortages due to various causes including rapid industrialization, development and climate change. In fact, many experts predict that more than two thirds of humans in countries including, Australia and will begin to experience water shortages by Generally, the semiconductor industry is responsible for a daily consumption of 7,500 to 15,000 tons of ultra pure water, which is equivalent to enough water to sustain a city of 50,000 residents for a day. As a leading semiconductor manufacturer, Samsung takes its responsibility to contribute to the effective management of water resources seriously and has set company-wide water management policies, reduction targets and strategies to secure and maintain sustainable water resources. / Samsung Electronics Sustainability Report 2012 / 27

29 Establishing a Water Resource Management Policy Sustainable water supply and water source preservation has become an important priority among all electronics companies including Samsung Electronics. Responding to growing industry needs, international business organizations for CSR including the EICC and WBCSD have created corporate water resource management guidelines. Recognizing the growing importance of global water resource management, Samsung Electronics has established water policies with a focus on enhanced stakeholder communication and minimization of management risk. Samsung Electronics Water Resource Management Policy Basic Philosophy Samsung Electronics recognizes the importance of water resources in the sustainability of society and business management, and contributes to its protection as a responsible corporate citizen of global community. Code of Conduct Strive to minimize water risk impact by our business activities. Analyze the impacts of our products, production activities and services make on water resources and minimize risks by identifying and implementing new technologies. Instill an awareness of the importance of water resources as a part of our corporate culture. Integrate the importance of water resource protection and sustainability management into the corporate culture and ensure responsible water resource management by employees with the highest consideration for the impact on local communities and the environment. Proactively cooperate with public water policies. Proactively contribute to the establishment and implementation of water resource management policies by international institutes, the government and local authorities in line with relevant guidelines. Disclose company policies and activities on water resource management. Disclose company s policies and activities related to water resource use to stakeholders including local communities in a transparent manner. Minimizing Water Management Risk Samsung Electronics set a 3% water use reduction target per production unit by We then collected water use data to identify plants with the highest water use, established a monitoring structure, identified reduction measures, and implemented cost effective measures to minimize business risks associated with water use and environmental impact. Semiconductor production is a core business of Samsung Electronics, which is exposed to significant business risks associated with water shortages. Recognizing its risk, we have analyzed water risk and developed redundant water supplies as well as an emergency response system to avoid any negative impact upon business. We also understand water risk as a serious global issue and are expanding monitoring efforts to collect data from our operations and verifying the reliability of efficient water consumption. Samsung Electronics is establishing a comprehensive water management system which reduces the cost and pressure on water resources by promot- 28 / Samsung Electronics Sustainability Report 2012 /

30 ing effective use of water. The amount of water used in increased in due to facility expansion and water use per unit production has also increased in overseas operation sites as 20 plants increased their production capacity and workforce. We plan to implement measures to reduce water use and increase reuse to reduce water use per unit production. The volume of waste water increased by 14% in compared to. We plan to achieve a 2% reduction in water use per year starting in For example, we have achieved significant reductions in water use by collecting ultra pure water used for the semiconductor and LCD production process and reusing it. The ultra pure water recycling rate at semiconductor and LCD production plants in was 51%. The recycling rate decreased compared to due to the addition of new production lines. We plan to implement additional facilities to further improve water recycling and the supply system. We are operating on-site sewage treatment and recycling facilities to reduce water use and discharge. Treated water is used for gardening and fire system. The Samsung Electronics plant in has installed a rainwater collection system and uses the collected rainwater for gardening and cleaning. Water Withdrawals for Operation Use Type Water Withdrawal by Sources ( 1,000 tons) Water Use Per Unit 2015 Target Per Unit Production Production Industrial Water Municipal Water Underground Water Total (ton/krw 100 million) (ton/krw 100 million) 1 103,562 5, , ,225 5, , ,413 5, , Global 103,562 17, , ,225 13, , ,413 14, , Water use per unit production: Total water use Sales ( or Global) 1 Target does not include waste use by LCD division, as it was established as an independent company in April The adjustment was made to reflect changes made in management scope with the separation of the LCD division as an independent company. Water Reuse Type Water Reuse Ultra Pure Water Recycling Reused Amount (1,000 tons) Reuse Rate (%) Supply (1,000 tons) Recovered Amount (1,000 tons) Recovery Rate (%) 81, ,321 59, , ,170 67, , ,300 66, Global 90, ,554 66, , ,636 72, , ,224 69, Data was adjusted in accordance with a change in calculation method for assessing reuse. Waste Water Discharge Type Discharges 2009 Discharge (1,000 tons) 78,745 87,639 97,370 Discharge per unit production (tons/krw 100 million) Global Discharge (1,000 tons) 82,866 91, ,906 Discharge per unit production (tons/krw 100 million) Waste water discharge per unit production: Total waste water discharge Sales ( or Global) / Samsung Electronics Sustainability Report 2012 / 29

31 Stakeholder Communication Effort on the Importance of Water Resources Samsung Electronics has recognized the importance of water resource management and has endeavored to communicate our water resource management policies and the importance of reducing negative environmental impacts. We are openly sharing water quality data on bodies of water in the vicinity of our operation sites, and we are promoting water quality improvement/ecosystem restoration projects in conjunction with students and NGOs in local communities. First, we have designated every Wednesday as a Water Conservation Day since We also installed a Digital Information Display which shows water resource management tips and conservation methods to help employees contribute to water conservation. We also reduced the pressure in the water supply line to reduce water use and achieve reductions in operation costs. Waste Water Discharge and its Impact on Bodies of Water Samsung Electronics processes all of its waste water through processing facilities before discharging the treated water into nearby rivers. Some of the domestic and overseas plants located in industrial parks discharge internally treated waste water into sewage treatment facilities located in the industrial parks for secondary treatment to ensure compliance with relevant legal standards. We are disclosing information in regards to water quality of waste water discharged from our production facilities so they are informed of our activities. We are also conducting river ecosystem restoration activities with NGOs to ensure good communication with local community members. Additionally, we are working with NGOs and students at nearby schools to conduct environmental clean-up activities for biodiversity protection and environmental conservation. For example, we have organized environmental cleanup volunteer groups in the and Hungary. We are collaborating with local governments in Vietnam to plant aquatic plants and for trash clean-up in local rivers. We are also conducting water conservation activities in all our domestic and overseas operation sites. Destination of Discharges Suwon Wonchun river Hwasung Wonchun river Gumi Nakdong river Gwangju Youngsan river Giheung Osan river Onyang Gokgyo river Tangjung Gokgyo river Cheonan Cheonan river Waste water from the Gumi and Gwangju plant is first processed in the internal treatment system, and then transferred to municipal waste water treatment plants. Aquatic Ecosystem Preservation and Water Quality Improvement Activities The Onyang production plant conducted an environmental impact study of sewage discharge to nearby rivers in collaboration with a local university. The study was conducted between November and October in collaboration with a local University. The team analyzed water quality characteristics of the discharge from operation sites and the water quality of the river where treated water is discharged, while studying the concentration of pollution in different parts of the river. The research results indicated that the water quality of Gokgyo River improved with improved waste water processing efficiency at the Onyang plant. We will continue to monitor the water quality of bodies of water near our production plants and implement pollution prevention activities. Pollution Management Samsung Electronics is enforcing an internal environmental standard which is stricter than required by regulations to ensure full compliance. We also set internal management targets to achieve further reduction and are employing most up-to-date environmental technologies in our new plants. We have tele-monitoring systems in our production plants for 24-hour pollution management, with emergency response systems in place for handling abnormal conditions. We also have an internal analysis lab which supports pollution management throughout production processes from its source to point of releases. Management of Air Pollutants Global air pollutant release data could not be compiled due to differences in air pollution data management methods in some countries. Release of the total amount of air pollutants is increasing due to an increase in production volume and an expansion of production lines. Regardless, we are managing air pollution concentration below legal standards. A separate acidic substance processing method was implemented on new production lines which began operation in for improved overall pollution treatment efficiency over the integrated treatment methods 30 / Samsung Electronics Sustainability Report 2012 /

32 employed on old production lines. For example, HF gas processing efficiency at the new facility was improved by 50% compared to conventional facilities. The Suwon plant also succeeded in reducing SO X emissions by employing new treatment chemicals. An additional wet-type electric scrubber was installed on the chimneys at semiconductor production plants to reduce emissions of non-toxic particulates. This new technology contributed in a 52% reduction in dust emissions through a relatively small investment. Emergency generators are installed at semiconductor and LCD production plants to prevent complicated work shut downs as well as costly damage associated with plant shut downs due to black outs. We installed an air pollution reduction unit employing a platinum catalytic converter to minimize the release of air pollutants associated with emergency power generator operation. All new boilers installed at our operation sites are built with low-no X burners with reduced pollution. The low-no X burner equipped boilers emit up to 50% less NO X emissions. For example, the introduction of low NO X burners in our semiconductor plants reduced annual NO X emissions by 20 tons. The Suwon operation site introduced a new treatment chemical for use in the on-site incinerator and achieved significant reduction in SO X emissions. Air Pollutant Discharge () (tons) Type 2009 SO X NO X Dust NH HF Water Pollutant Control Samsung Electronics is employing new technologies and renovating facilities to minimize water pollutants discharge. We are increasing our waste water recycling rate by installing organic waste treatment and water recycling facilities to reduce discharge of water pollutants. Waste water and water pollutants from semiconductor production facilities has been increasing steadily with the increase in production volume, but efficiency improvement made in waste water treatment facilities is keeping the concentration of water pollutants below internal management standards. We also achieved a 30% reduction in water pollutant concentrations by improving the efficiency of waste water processing facilities. Water Pollutant Discharge (tons) Type Parameter 2009 COD BOD SS F Heavy metals Global COD BOD SS F Heavy metals Waste water processed at the Cheonan industrial park waste water treatment plant is excluded 1 Amount of total heavy metal release increased due to additional release of new heavy metals associated with changes made in the production process. / Samsung Electronics Sustainability Report 2012 / 31

33 Waste Management Achieving 100% recycling of all waste is the ultimate goal of Samsung Electronics waste management policy. Additionally, we are working towards achieving the target by expanding the types of waste recycled. In, we began recycling and utilizing of waste glass, waste plastics, and organic sludge which were incinerated or landfilled in the past. We have set a mid-term target of achieving a 95% waste recycling rate and to establish a recycling-oriented waste management system to achieve minimization in waste generation. In addition to increasing our recycling rate, Samsung Electronics is striving to reduce waste generation. We have also set an annual waste reduction target of 10% each year until to In, the volume of waste generated has increased by 7%. However, the volume of waste per unit of production has remained same level to previous years. Increase in production volume and scrap generated from replacement of old production facilities are contributing to an increase in waste generated. However, we are making various efforts including reduction and reuse of packaging for parts and reduction in paper use to achieve an overall reduction in waste generation. Additionally, Samsung Electronics is closely monitoring waste processing companies by making site visits and checking terminal processing of the waste to prevent illegal processing and illegal shipping of waste over national borders. Waste Generated and Recycling Rate () Generated (ton) Recycled (ton) Waste generation per unit production (ton/krw 100 milion) Waste Generated and Recycling Rate (Global) Generated (ton) Recycled (ton) Waste generation per unit production (ton/krw 100 milion) , ,412 92% 520, , , , , ,266 94% 94% 91% 711, ,942 91% 2009 Waste generation per unit production: Total waste generation sales ( or Global) Waste Type and Processing Methods (tons) 2% 2% 4% 7% 94% 91% Global Recycling 490,123 Landfilled (off site) 22,009 Incinerated (off site) 12,255 Total 524,387 Recycling 645,942 Landfilled (off site) 49,143 Incinerated (off site) 16,786 Total 711, / Samsung Electronics Sustainability Report 2012 /

34 Hazardous Waste Generation () (tons) 1 Figures revised due to a change in hazardous waste management standard of a company separated in the same facility Operation Site Hazardous Materials Management Samsung Electronics is taking various measures, including implementation of a Hazardous Substance Pre-assessment System, to prevent release of hazardous substances within and outside of Samsung Electronics operation sites. Our computerized hazardous substance management system monitors all processes including purchasing, arrival, use, release and transfer of relevant chemicals to ensure that all hazardous substances are handled appropriately in compliance with relevant rules. The volume of hazardous material used at Samsung Electronics production is increasing with expanding production volume. However, we plan to reduce the use of hazardous materials relative to sales by 1% each year. We are also conducting regular inspection of storage and facilities where the materials are used and conducting regular training for employees who handle the materials. We have had no accidental hazardous material leakages. Volume of Hazardous Material Used () Total volume (1,000 tons) Per production unit (tons/krw 100 million) Hazardous material used per unit production: Hazardous material used/sales () Management of Ozone Depleting Substances Samsung Electronics continues to reduce the use of ozone depleting substances (ODS) as defined by the Montreal Protocol. The ozone depletion materials used by Samsung are refrigerants in freezers and a fire extinguishing agent in automatic fire control systems. We implemented a refrigerant recovery system to reduce the release of used refrigerants and to increase the recovery ratio by 15%. Old freezers were also retrofitted to reduce the release of ODS. The fire extinguishing agents are also gradually replaced with non-ods agents to further reduce the use of ODS. / Samsung Electronics Sustainability Report 2012 / 33

35 Biodiversity Biodiversity Conservation: Basic Philosophy and Action Plan Demand for the protection of biodiversity is increasing since an international agreement on biodiversity protection was signed in Samsung Electronics is responding to changing demands by raising awareness on the importance of biodiversity. We have created a basic philosophy and action plan on biodiversity protection to promote it in our business activities. Biodiversity Conservation Policy Basic Philosophy of Biodiversity Conservation Samsung Electronics recognizes the benefits of healthy ecosystems and rich biodiversity, and we shall minimize negative impacts on biodiversity and actively promote ecosystem protection activities. Action Plan on Biodiversity Protection Value Recognition All employees shall regard biodiversity conservation activities as an important part of green management. Assessment and Reduction of impact on Environment Analyze lifecycle impact of our products on biodiversity and the ecosystem while making an effort to minimize all negative impacts identified. Biodiversity Conservation Activities Place a higher priority on environmental management of operation sites with higher biodiversity and implement biodiversity protection activities tailored for each site. Communication Maintain good communication with stakeholders including employees, local communities and NGOs, and collaborate with them to make contributions in local biodiversity protection initiatives. 34 / Samsung Electronics Sustainability Report 2012 /

36 Green Communication Stakeholder Communication Stakeholder Communication Programs Samsung Electronics is actively communicating with various stakeholders in recognition of the importance of stakeholder communication in making sound business decisions. We are listening to the opinions of all types of stakeholders including consumers, suppliers, NGOs, local communities, media and governments while striving to reflect their concerns and ideas in our green management activities. Key Stakeholders and Communication Channels consumer environmental awareness survey Environmental sister school operation Green marketing Provision of environmentally friendly product information Consumer Local communities Environmental campaign with local community members One company one village support pledge Support for establishment of GHG inventory Training on climate change Green procurement policies Suppliers Stakeholder Communication NGO Respond to environmental surveys Respond to green company assessment survey Disclosure of sustainability report on web site Samsung Live news Collection of ideas through short message discussion Environmental campaign participation Employee Government Participation in green consumption promotion campaign Participation in carbon footprint labeling scheme Membership and Activities in Associations Samsung Electronics is increasing membership to various associations for promotion of corporate social responsibility and green management in order to further strengthen its foundation for more responsible business management. For example, Samsung Electronics joined the World Business Council for Sustainable Development (WBCSD) which pursues the creation a sustainable future for business, society and the environment. It currently has 200 CEOs of global corporations as members. We are participating in the annual meetings and working group council meetings to share Samsung Electronics green management successes and learn about the green management status of other leading corporations as well as new trends in green business management. Samsung also became the first company in to join EICC (CSR consultation body for the Electronics Industry). We actively participated in EICC activities including revision of the code of conduct in addition to participating in general meetings. We also participated in the Business Summit (B20) which was held during the G20 summit. At the B20, Samsung Electronics participated in the Green Growth subgroup meeting and shared our green management achievements in addition to future plans with other industry leaders. / Samsung Electronics Sustainability Report 2012 / 35

37 Employee Communication Employee Environmental Communication We are using internal communication channels including internal broadcasts and our intranet to share information on environmental affairs and exchange ideas on improvement. A number of videos were created to encourage employees to live a greener life-style. A polar bear character was created to encourage the promotion of a green life-style in everyday activities. We established a short message discussion forum and environmental columns to discuss environmental issues. Employees can actively contribute Eco-Product ideas and green life-style tips to raise awareness about the environment. Green Lifestyle Campaign Videos (Office Episode) Green Lifestyle Campaign Videos (Automobile Episode) Samsung Electronics Live Discussion Employee Campaigns We are conducting environmental volunteer activities and environmental education campaigns for employees. The volunteer cleanup and environmental education program takes place twice a year at Gwangreung forest which is designated as a biodiversity protection area. In May, Samsung Electronics invited family members of employees to a green away day with programs including a climate change experience center and environmental education classes for children. Gwangreung Forest Ecosystem Protection Campaign Climate Change Experience Center Environmental Education Class 36 / Samsung Electronics Sustainability Report 2012 /

38 Global Environmental Preservation Activities Samsung Electronics is conducting a number of programs to contribute to environmental protection around the world. Central and South America World Day for Water Ceremony World Day for Water Clean Up Activities Global Action Day Program World Day for Water Ecosystem Preservation Activities A number of volunteer activities were conducted on March 22, 2012, the 20th World Water Day. For example, 150 employees from the Suwon plant joined members of the Suwon YWCA, the Suwon Environmental Movement Center and the Citizens Coalition for Economic Justice to remove trash from the Singal water reservoir. The student volunteers at Hwangsang elementary school, a sister organization of Samsung Electronics, conducted waterway tracking and cleanup activities as well. Another volunteer group conducted a water conservation campaign at Guhado eco-park in Hanam Industrial Park and cleaned up a lake located in the park. Employee volunteer group conducted a collection of activities from installation of a sand collector, removal of non-native species, planting of native sweetbrier plants and trash clean-up to protect the dune ecosystem. Green Activities with Local Community In, 320 employees participated in trash removal at three lakes and planted trees around the lakes for preservation of the aquatic environment. The volunteers also spent time on raising awareness of the importance of environmental protection and green life-styles. Global Action Children Event Samsung Electronics has been conducting campaigns on a ban of clear-cutting of the Amazon rainforest and other relevant activities. The Samsung Electronics office in Manos, Brazil hosted a Global Action day program on May 14, with more than 3,000 members of local communities. Samsung Electronics volunteers gave away toys made of recycled industrial waste and taught local children on the importance of recycling. / Samsung Electronics Sustainability Report 2012 / 37

39 South East Asia Africa River Clean-up Activities in Vietnam and Philippines Slovakia Children Eco-Class Solar-Powered Internet School Indonesia Tree Planting Activities Samsung Electronics volunteers conducted river clean-up activities in commemoration of World Water Day. In Vietnam, volunteers removed trash and planted aquatic plants along the Cau river in partnership with the local government. In the Philippines, volunteers conducted clean-up activities along the San Cristobal river and planted trees around the plant premises. The volunteers of Samsung Electronics Indonesia branch make regular visits to local orphanages to conduct eco-system protection education and to plant trees. Slovakia Birdhouse Campaign In Slovakia, we conducted a birdhouse installation project to protect rare bird species living in the vicinity of our operation site. Children from local communities participated both in the construction and installation of birdhouses. The participants were also given lessons on the importance of the ecosystem and environmental protection. In Hungary, we held an employee environmental protection campaign poster contest and encouraged the use of bicycles for commuting to raise awareness on environmental protection. Donation of Solar LED Lantern Samsung Electronics has created a 100% solar-powered mobile classrooms named the Solar-powered Internet School and supplied them in Africa. We also began the supply of solar-powered LED lanterns, for areas that do not have access to electricity, in collaboration with the Volunteer Organization. Manufactured using durable Samsung Electronics parts including LEDs, solar panels, and batteries, the LED lantern is designed to last for more than 10 years without GHG emissions. We plan to conduct green communication activities using our green IT technologies and provide benefits to 5 million African residents by / Samsung Electronics Sustainability Report 2012 /